DAS BAHUUDDESHY VISHWAST SANSTHA,SANGLI vs. EXEMPTION WARD, KOLHAPUR

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ITA 33/PUN/2020Status: HeardITAT Pune04 May 2022AY 2016-174 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the amount was received from a trustee specifically for the building fund and was taken directly to the balance sheet, it constituted a corpus donation and was not chargeable to tax.

What were the facts?

The assessee, a trust, received Rs. 15.00 lakh from one of its trustees, which was directly added to the building fund in the balance sheet. The Assessing Officer treated this as a taxable addition, which was upheld by the CIT(Appeals).

What were the issues?

Whether a donation received from a trustee for a specific purpose, directly credited to the balance sheet, is a taxable receipt or a corpus donation.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Appellant: Shri M.K. Kulkarni
For Respondent: Shri Rajesh Gawali

आदेश / ORDER

PER R.S.SYAL, VP : This appeal by the assessee is directed against the order passed by the CIT (Appeals) -2, Kolhapur on 23-10-2019 in relation to the assessment year 2016-17. 2. The only issue raised in this appeal is against the confirmation of addition of Rs.15.00 lakh made by the Assessing Officer (AO). 3. Briefly stated, the facts of the case are that the assessee is a trust registered under Bombay Public Trust Act, 1950 and running one school named as MLA Suresh Bhau Khade English Medium School. Return was filed declaring total income at Nil. During the

1.

Das Bahuuddeshy Vishwast Sanstha course of assessment proceedings, the AO observed from the Balance sheet of the assessee that a sum of Rs.15.00 lakh was added to Building Fund. On being called upon to explain the source of the above, the assessee submitted that the amount was directly transferred to the assessee’s bank account from the account of Datta Dagdu Khade, one of the trustees of the assessee-trust.

The amount was stated to be taken directly to the balance sheet because it was a donation with a specific direction for Building.

Not convinced, the AO made addition of Rs.15.00 lakh. In the first appeal, the ld. CIT(A) affirmed the addition, against which the assessee has come up in appeal before the Tribunal.

4.

Having heard both the sides and gone through the relevant material on record, it is seen as an admitted position that the assessee received a sum of Rs.15.00 lakh from one of its trustees, which amount was spent on building construction of the school.

The case of the assessee is that the amount was a corpus donation and hence, not chargeable to tax, which has been jettisoned by the authorities by treating it as a chargeable receipt. Admittedly, the amount was not taken to Income and Expenditure Account but was taken straightaway to the balance sheet. During the course of assessment proceedings it was categorically stated that it was Das Bahuuddeshy Vishwast Sanstha received from one of the trustees with a specific direction. In view of the fact that the said sum of Rs.15.00 lakh was received by the assessee from one of the trustees towards building fund and was taken to the balance sheet only, amply shows that it was received as a corpus donation and hence not chargeable to tax. I, therefore, overturn the impugned order and delete the addition.

5.

In the result, the appeal is allowed. Order pronounced in the Open Court on 04th May, 2022.

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